Health Insurance 101  Explained

Health insurance, also known as medical coverage, is quite possibly the most important thing most of us own. However, the terms used to describe it are confusing and often have different meanings for different people. If you're looking for a way to understand health insurance policies and know which steps to take in order to get the best deal possible, read on! This article will answer any of your health insurance questions while providing helpful tips on how best to go about shopping for your policy.

This is going to be a comprehensive guide that will teach you everything you need about health insurance in one place. So sit back and relax- this could be a long one...

What is Health Insurance?

Health insurance, or medical coverage, is a way for individuals to protect themselves financially in the event of an illness or an injury. The way it works is that the individual pays monthly premiums (the price) to pay for the health care cost they might incur. These monthly payments will differ depending on the type of plan you have and what company you decide to go with. Every health insurance plan has different benefits and exclusions- some cover prescriptions, some do not, some cover hospital stays but not doctor visits, etc. The benefit of having health insurance (although we can hopefully avoid needing it) is that you're able to get treatment for any kind of medical condition without having to consider how much it costs. Also, health insurance protects you should you meet the criteria of a pre-existing illness or injury. If you are injured on the job or in an accident and are unable to return to work, then your employer will have to pay for your health care needs as if you were not under a policy.

Although this sounds like a pretty great idea, there are some downsides to health coverage as well. For one, there can be very big expenses involved if you end up needing medical attention for something that is not covered by your plan. Also, even though pre-existing conditions are covered, past illnesses can sometimes remain a burden if they don't catch up with you until later in life. As a precautionary measure, it is wise to have a plan that will cover these things.

What Are the Different Types of Health Insurance?

HMO - HMO stands for Health Maintenance Organization. A HMO is just what it sounds like- an organization/company that will be your primary care doctor and "manage" your health care needs and insurance claims. This means they will handle all of your medical bills, except in emergency situations when you must go to an out-of-network facility or specialist, at which point they will pay a portion of the bill for you. You are not required to use their clinics and doctors. However, this is the least flexible option and will likely have the highest monthly costs.

PPO - The PPO stands for Preferred Provider Organization. Similar concept to an HMO, except you can use out-of-network doctors and clinics as well as get discounts on prescription drugs. In many states, your insurance company will not pay for emergency services, meaning that if you need to go to the hospital quickly because of a medical emergency or accident then you'll have to pay a portion of your bills out of pocket unless your insurance policy has "Emergency" coverage. If you are going to need emergency services covered or if you are going to need to visit out-of-network providers as well, then a PPO may be your best option.

EPO - An EPO is an Exclusive Provider Organization. This plan works similarly to a HMO in that you use a set list of doctors and must go to them for care, except that the EPO can restrict the amount of coverage they will give you each year. For example: with an HMO, if you exceed your deductible amount then the insurance company will pay up to 100% of all charges (minus your co-pay). With an EPO, they may only pay up to 80% even after your deductible is met.

PPACA - The PPACA, or Patient Protection and Affordable Care Act, is the law that was signed in 2010 and was passed in order to change the way we handle health insurance. This act put into effect new regulations on insurance policies and made it illegal for companies to deny coverage based on pre-existing conditions. It also made it so that children can stay on their parents' health insurance policies until they are 26 years old. These two main stipulations are very important to consider when looking for a policy. The PPACA will affect all policies starting September 23rd of 2013, so if you have been looking for a new plan recently then it's likely that you've found a policy that is affected by this recent legislation.

If I Already Have Health Insurance, Should I Switch To Something New?

It is a very good idea to review your health insurance policy every year to be sure that you are getting the best coverage possible. Many times, switching plans or companies will result in a big discount without any change in quality of care, especially if you have a chronic or ongoing medical condition. In fact, if you have been denied coverage before or had trouble finding affordable coverage it may be worth looking into the PPACA and seeing what options there are for you. For more about this currently active piece of legislation check out this article from healthinsurance.org.

How Much Can I Expect To Pay?

It really depends on what you're looking for... As of this writing (July 2013) the average individual health insurance plan is $167 per month for a mid-tier plan. This includes coverage for your spouse and children as well. Other factors that will affect cost include: location, age and gender of policy holder, type of plan (PPO/HMO/EPO), and whether or not you have pre-existing conditions. For perfect examples of how these factors will affect your policy costs, check out the following links:

Individual Health Insurance Cost Calculator for HMOs and PPOs

Individual Health Insurance Cost Calculator for EPOs (Exclusive Provider Organizations)

Hopefully you now have all of your questions answered about health insurance! Check out some other facts about health insurance below to help you understand it even more.

What Is the Difference Between a Health Insurance Policy and a Health Care Plan?

Although they have some similarities, there are actually quite a few differences between the two. Most importantly, health insurance policies and plans do not cover medical care. Instead, they provide you with financial protection in case you need to use medical services or treatment. This is important because most insurance plans will only pay for expenses up to a certain basic level (depending on your plan) and then it is up to the patient to pay for any additional costs out of pocket, which can be quite significant if medical expenses are not taken into account when calculating your monthly premiums.

Conclusion

Health insurance is a very important thing that everyone should have. When the time comes that you need medical care, you need to be sure that you are covered. There are many different kinds of options available, and each one is going to have its pros and cons. Take the time now to research all the options and make sure you find one that works for your needs and budget. Finally, one last question: Do you want to pay more for less? To learn more about how this affects you check out this article from healthinsurance.org. Also, if in doubt about whether or not health insurance is right for you, then please see a licensed physician before making any decisions.